Technip slashes IOC bid to win Mathura contract

Vol 20, PW 15 (20 Apr 17) Midstream & Downstream

Not often do you see a company jump from third place to first in a tender.

But Technip KT India has managed just that in an IndianOil race to hire a project consultant for an upgrade job at the 8m t/y Mathura refinery in Uttar Pradesh. To everyone's surprise Technip slashed its price during negotiations by 26% - a Rs60cr ($9.3m) reduction.

IndianOil wants the consultant to oversee construction of a diesel hydro-treater to remove sulphur and another facility to extract high-end diesel and LPG from refinery residue. When price bids were first opened end-March, Toyo Engineering bid lowest at Rs179.29cr ($27.6m) followed by ThyssenKrupp at Rs212.84cr ($33m); Technip bid Rs225cr ($34.7m).

IndianOil then began negotiations privately with each bidder, asking for a price reduction of at least 12%. All three submitted fresh price bids which were opened on April 2.

Technip reduced its price by Rs60cr ($9.3m) to Rs165cr ($25.4m) making it the lowest bidder. Next was Toyo with a fresh quote of Rs166cr ($25.6m) down by Rs13.29cr ($2m) from its earlier offer.

ThyssenKrupp did not reduce its original Rs212.84cr price and was relegated to third place. IOC's board is expected to meet on April 24 to clear the Technip award.

"This was totally unexpected," comments an observer. "Technip is probably desperate for refinery work and might have chosen to exclude 'man-hour' costs from its revised bid."